Following its rapid recovery after the financial crisis and ensuing tsunami that put a sizable dent in Japan’s exports, Toyota Motor Corp. (NYSE:TM) is once again well-endowed with cash and is looking to spend up to 360 billion yen ($3.5 billion) on share buybacks, or up to 1.89 percent of its outstanding float.
The Prius maker is anticipating record profits for the financial year that ends March 31, and it is returning cash to shareholders and boosting its return on equity after its cash pile swelled to 1.8 trillion yen as of the end of December. Toyota announced on Wednesday that it would sell 30 million shares to the Japan Trustee Services Bank for a token sum of 1 yen per share, Reuters reports.
The dividends from that sale will be used to finance a new foundation that will support the auto industry’s development and environmental protection; the remaining 30 million or so shares will be canceled. ”We want to reward our shareholders through this buyback and cancellation,” Toyota spokesman Ryo Sakai said, per Reuters.
A sliding yen has helped propel profits for Japanese manufacturers, and Toyota has predicted a record 1.9 trillion yen net profit for the year ending March 31. This buyback would represent the first in five years, and it is the largest since 2003, when the company paid out 390 billion yen to shareholders.
Reuters reports that Toyota is among other Japanese manufacturers, like Canon Inc., to recently hike their returns to shareholders. Overall, Japanese companies tend to channel less money to investors when compared to the international average.
“At a time when it’s no longer special for the biggest car makers to sell around 10 million vehicles a year, we want to see how Toyota will make investments to take charge in the industry,” Satoru Takada, a senior analyst at industry research firm TIW, told the news service.
Toyota is hoping to sell 4 percent more vehicles in 2014 than it did in 2013, or 10.32 million vehicles this year. An updated Camry sedan and Prius hybrid, two of Toyota’s power sellers, should be revealed later this year.
The share buyback plan is still up in the air, pending a shareholder vote in June.